Facts of the Case

M/S Goyal Steel Furniture, through its proprietor, challenged an order dated 18.12.2024 imposing a penalty of Rs.50,000/- under Section 125 of the GST Act, along with the appellate order dated 28.07.2025 dismissing its appeal as beyond limitation.

Issues Involved

  1. Whether the penalty of Rs.50,000/- imposed under Section 125 of the GST Act exceeded the statutory maximum prescribed under that provision.
  2. Whether the penalty order was vitiated for want of an opportunity of hearing.

Petitioner's Arguments

  • The penalty of Rs.50,000/- was imposed under Section 125 without even giving an opportunity of hearing.
  • In terms of Section 125, the maximum penalty imposable is Rs.25,000/-, and the order was mechanical in imposing double that amount, contrary to the express mandate of the provision.

Respondent's Arguments

  • No specific defence to the merits was recorded; the matter was heard through counsel holding brief for the petitioner and the Standing Counsel for the respondents.

Court Order / Findings

  • Considering that no opportunity of hearing had been granted or was reflected in the impugned order, the Court quashed both the order dated 18.12.2024 and the appellate order dated 28.07.2025.
  • The matter was remanded to the authority concerned to pass a fresh order after giving an opportunity of hearing in accordance with law.
  • The writ petition was allowed with the above observations.

Important Clarification

  • Section 125 of the CGST Act — the general "residual" penalty provision — caps the penalty at Rs.25,000/-; any order imposing a higher amount under this Section, especially one passed without a hearing, is liable to be quashed as both procedurally infirm and substantively contrary to the statutory ceiling.

Sections Involved

  • Section 125 of the CGST Act, 2017 — the general penalty provision for contraventions not separately penalised elsewhere in the Act, subject to a maximum of Rs.25,000/-.

Decision – In Favour of

Assessee. The penalty order and the appellate dismissal were quashed, with the matter remanded for fresh adjudication after hearing.

Case Details

High Court of Judicature at Allahabad, Lucknow Bench; Writ Tax No. 816 of 2025; Neutral Citation No. 2025:AHC-LKO:49410; Coram: Justice Pankaj Bhatia; Order dated 22.08.2025.

Link to Download the Order

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